Bill Aimed at Prohibiting Reverse Payment Settlements Clears Senate Judiciary Committee

The Senate Judiciary Committee passed the "Preserve Access to Affordable Generics Act" (S. 316) today by unanimous consent.  If enacted, the bill would prohibit "reverse payment" settlements of Hatch-Waxman litigation, in which an innovator drug company pays a generic drug company to delay marketing its generic drug product.  Specifically, the bill would amend the Clayton Act by adding a new Section 28, reading in part:

(a) It shall be unlawful under this Act for any person, in connection with the sale of a drug product, to directly or indirectly be a party to any agreement resolving or settling a patent infringement claim in which--

(1) an ANDA filer receives anything of value; and

(2) the ANDA filer agrees not to research, develop, manufacture, market, or sell the ANDA product for any period of time.

(b) Nothing in this section shall prohibit a resolution or settlement of a patent infringement claim in which the value paid by the NDA holder to the ANDA filer as a part of the resolution or settlement of the patent infringement claim includes no more than the right to market the ANDA product prior to the expiration of the patent that is the basis for the patent infringement claim.

The bill is thus a legislative solution to reverse payment settlements, which have been endorsed by federal courts in cases such as FTC v. Schering and In re: Tamoxifen Citrate Antitrust Litigation.  The FTC has been a vocal critic of such decisions.

RELATED READING:

• Sen. Kohl's press release on committee passage of the bill
• Sen. Leahy's press release on committee passage of the bill